representing homeowners

Goldman Hearings: “I Wouldn’t Trust You.”

Seriously, my ears are bleeding from listening to these hearings all day. I was working at the same time, I swear. I’m going to have nightmares about “shitty deals” and lemonade. NY Times Live Blog here.

Gawker has tips for surviving a grilling Blankfein style (expressive!)

Richard Adams at the Guardian also did an entertaining live blog and concluded as follows:

Conclusion: Goldman Sachs aren’t the first group of people to find themselves caught like rabbits in headlights before a hostile Congressional committee. They have learned the hard way about the level of hostility that exists towards them and to Wall Street, a hostility not at all tempered by the fact of an economic train wreck and it being an election year. And they have learned the iron rule of Capitol Hill: the most dangerous place in Washington DC is between a US senator and a TV camera.

Despite all that, Goldman Sachs came with nothing. In its mind the bank has done nothing wrong, nothing whatsoever. In fact it believes quite the reverse: that its actions are beyond reproach, barring a few choice emails that they’d rather hadn’t been made public, and that GS is merely an honest market-maker. Reading the tweets of disbelief from Wall Street and its allies, that lambasted the senators for not understanding how things are done, or how the market works, reinforces that view.

The thing is, the senators don’t understand how a modern investment bank works – or rather, now they’ve found out, they are shocked. That a reputable bank can play both sides of the market, like the mob telling one of its boxers to take a fall, selling investments at the same time as selling those clients and investments short, is what has shocked them. It doesn’t shock Goldman Sachs or Wall Street because that’s the way it has evolved, and if those silly old senators haven’t caught up, that’s their problem. To the senators though, that’s betting against their own clients. According to Goldman, that’s “reducing risk”.

At this stage in the proceedings, the Goldman Sachs’ public relations people must be feeling more than a little down. The firm’s lawyers are still breathing fire, Lloyd Blankfein trod the fine line between not being apologetic and actually saying “it’s capitalism, stupid”, and the more junior executives interrogated today did not say anything blatantly incriminating. But the public image of the firm around the world – including with finance ministers and pension funds – has taken a severe beating

The last word should go to Carl Levin, from his grilling of Blankfein: “They’re buying something from you – and you are betting against it. And you want people to trust you. I wouldn’t trust you.”